Problem:The state PIRG's latest report, "Paying
the Price: A 19-State Survey of the High Cost of Prescription Drugs"
found that uninsured consumers paid 72% more, on average, than the
federal government pays in bulk for the 10 most commonly prescribed
prescription drugs. In 2003, American employers spent more than
$70 billion through pharmacy benefit managers, and their drug bills
rose 9.1 percent. Congress and the current administration have failed
to enact meaningful reforms to reduce the prices Americans pay for
their prescription medication. As a result, consumers have been
forced to find their own solutions to the high cost of prescription
drugs. Last year, an estimated 1-2 million Americans spent approximately
$1 billion on technically illegal purchases of prescription drugs
from Canadian pharmacies.

Prescription
drug prices are soaring at over 4 times the rate of inflation, and
account for the third largest area of health expenditures, behind
only hospital care and physician services. According to the Centers
for Medicare & Medicaid Services, prescription drug spending
is projected to increase to $235 billion per year by 2005. Consumers
pay up to 30% of the total cost out-of-pocket. In 2002, the top
ten prescription drug companies netted profits of $36 billion; that
is equal to more than one-half of all profits for Fortune 500 companies
in the same year.

Because of our
federal elected officials' unwillingness to take on the powerful
Phrma lobby and regulate the pharmaceutical industry, Americans
pay more for their prescription medication than citizens in any
other industrialized nation. State officials have done what they
can, and continue to lead the way, but Congress needs to do more
to fight the tactics used by the drug industry to keep prices high.

For example,
pharmaceutical companies spend millions on marketing their products
to both consumers and doctors to influence which prescriptions patients
request and which prescriptions doctors prescribe. The rapid growth
of Direct-To-Consumer drug advertising has fueled an increase in
the use of over-priced brand name drugs and often resulted in consumers
becoming over-medicated. Worse, neither consumers nor doctors have
access to the information needed to make informed decisions about
the cost and efficacy of these prescription medications.

In addition,
the drug companies promote myths about allegedly high research and
development costs to justify the high price of prescription drugs.
And, the industry exploits loopholes in the law to prevent lower
price generic drugs from reaching the market.

Unfortunately,
current law stifles fair competition and allows pharmaceutical companies
to dictate the prices charged for prescription drugs. For example,
the federal government is prohibited from utilizing its buying power
to negotiate lower prescription drug prices on behalf of non-federal
employees and large populations that cannot afford prescription
drugs. Further, the Pharmacy Benefit Managers (PBM's) that control
the majority of the country's drug supply do not disclose the price
that they charge their customers for prescription medication.

Solution:The PIRG platform: allow consumers and state agencies to buy
drugs in bulk through prescription buying pools, increase access
to low-cost generic drugs and provide more information on effectiveness
of similar drugs so the buying pools can get the best drugs at the
best prices.

To lower the
cost of prescription drugs for all Americans, Congress and the Administration
must take steps to regulate the pharmaceutical market and protect
consumers from the pharmaceutical companies' profit motives and
willingness to deny medication to those who need it most.

1) Congress
should immediately rescind provisions of last year's Medicare law
that prevent the federal government from negotiating with the drug
industry on behalf of consumers. For example, the federal government
should negotiate lower drug prices on behalf of all 40 million Medicare
beneficiaries. The Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (HR 1) signed into law by President Bush in December,
wrongly prohibits administrators of the program from entering into
voluntary negotiations with drug companies to achieve fairer prices.

2) In the short
run, the most effective step Congress could take right now is to
enact legislation legalizing the reimportation of lower-priced prescription
drugs from Canada and other countries with smilar regulatory systems.

3) Congress
should encourage creation of prescription drug buying pools that
would allow businesses, the government and individuals of all ages
to use their combined buying power to negotiate lower drug prices,
as numerous states have done.

4) Congress
should end the practice of direct to consumer (DTC) advertising.
As an interim step, it should close loopholes in current legislation
allowing DTC advertising. For instance, a drug manufacturer does
not have to include information about the side effects of a drug
in a DTC ad, if the advertisement does not explicitly say what the
drug is used to treat.

5) Congress
should place strict limits on drug company marketing to doctors
and health professionals, known also as physician directed pharmaceutical
promotion or detailing.

6) Congress
should fund comparative effectiveness research as a consumer education,
doctor education, and cost-containment measure. More specifically,
U.S. PIRG supports creating a national version of "The Drug
Effectiveness Review Project" created by the state of Oregon.
The state began funding and using evidence-based research (EBR)
related to prescription drugs for its Medicaid program in 2002.

7) Congress
should close the loopholes in the Hatch-Waxman Act, that allow pharmaceutical
companies to use various tactics to delay the introduction of lower-cost
generic drugs.

Legislative
Update:

Negotiation:
U.S. PIRG has urged
support of a discharge petition (Frost-D-TX) that would bring
HR
3767 (Berry-D-AR) to the House floor for a vote. Leadership
has blocked the bill, which has 52 co-sponsors. If the House bill
passes, similar legislation would immiediately move through the
Senate.

Reimportation:
The House passed HR
2427 last session on July 25, 2003 (introduced by Rep. Gutknecht
R- Minnesota). The measure had bipartisan support, 53 co-sponsors
and passed by a vote of 243-186. (155 Democrats, 87 Republicans
and 1 independent voted for the bill.) This session two Senate bills
to legalize the importation of drugs have a chance at passage. The
PIRG-backed bi-partisan Senate bill (letter
of support) with bipartisan support, S
2328, (Dorgan (D-ND)-Snowe (R-ME)), has 30 co-sponsors and is
being held-up in the Senate Committee on Health, Education Labor
and Pensions (HELP). HELP Chairman Gregg (R-NH) has a competing
bill, S
2493, which would impose extremely burdensome requirements on
the FDA and foreign exporting pharmacies and delay importation from
Canada for another year.